MoD estate management 'inefficient'

Friday, July 09, 2010

The Ministry of Defence is not getting value for money out of its £20bn property estate and should look to sell more land and use the remaining estate more efficiently, according to a report by the National Audit Office (NAO).

While the report acknowledges that MoD estate planning has improved, it says the changes are still not providing the best value for money to taxpayers.

The MoD has focused on maintaining land based on operational needs, and "does not give sufficient weight to other factors such as how heavily a site is used, running costs, or potential income from sale," the report says.

Amyas Morse, head of the National Audit Office, said: "The Ministry of Defence needs to change its mindset towards its estate, so that not only does it, rightly, focus on operational needs, but also gives due emphasis to making the reductions in costs needed in the current fiscal climate.

"The evidence is that the department could substantially build on the progress it has already made in rationalising its estate and reducing costs. But it should do this, not by simply responding to individual opportunities as they occur, but in a systematic way, based on clear objectives, adequate mechanisms for achieving them and good quality central data."

Between 1998 and 2008, the MoD made £3.4bn in sales of surplus property that was identified as not being needed for training. In the same period, the ministry cut the number of civilian and military personnel three times faster than it reduced its built estate. The NAO say this means there could be opportunities to sell more land and buildings, cutting costs and generating income.

The MoD has identified 12 per cent of its sites, comprising two per cent of the estate by size, as suitable for disposal. Future opportunities for efficiencies could come in the wake of the Strategic Defence and Security Review (SDSR), the NAO said. Widely expected cuts in the number of armed forces personnel should give the MoD an opportunity to consider the minimum estate required to meet the needs of the "reshaped" armed forces.

The ministry's defence-wide estate plan was seen as a step in the right direction, but was criticised for not specifying what the correct size of the estate should be or how much it should cost to run. It was also said to lack supporting measures, including the ability to judge where progress had been made.

The estate management issues were said to be because the MoD lacks sufficient data centrally to conduct the necessary analysis to help it reduce costs in a structured way.

The NAO said the ministry needed to store data centrally on the operational importance, utilisation, condition, potential value and running costs of its estate.

Responding to the report, defence minister Andrew Robathan said: "We accept that more needs to be done and officials will consider the report's recommendations in detail."